WITNESS STATEMENTS AND COST BUDGETS: “THEY WILL HAVE BECOME AN ARTIFICIAL CONSTRUCT OF THE LAWYERS”

There are some interesting observations in the judgment of Chief Master Marsh in Various Claimants v MGN Ltd [2018] EWHC 1244 (Ch). The way in which a witness statement is likely to be drafted can be considered at the cost budget stage and is relevant to the budget. The Master sets out a clear warning about the “over-drafting” of witness statements.

“… the statements must be, as far as possible, the witness’ recollection, such as it is, of the relevant events uninfluenced by the exigencies of the case. It is concerning to see an assumption in both cases that there is to be a conference with counsel to review the statements.”

THE CASE

The Master was budgeting two cases in the Mirror Hacking Litigation. The defendants’ costs had been agreed, the court was budgeting the costs of two of the claimants.

OBSERVATIONS IN RELATION TO THE BUDGET AND WITNESS EVIDENCE

The factual context in which the court is asked to assess the budget phase for witnesses is unsatisfactory. The budgets for Mr Leslie and Miss Houghton each provide the assumptions upon which the revised calculations are made. In each case it is said the budget is based upon each of them producing witness statements for up to 5 witnesses and considering up to 20 witness statements served by the defendant. However, Mr Browne QC’s skeleton argument invited the court to proceed on the assumption that the two claimants will produce up to 20 witnesses between them. I am told the defendant expects to produce up to 10 witness statements dealing with general issues and up to 20 short statements (not exceeding 5 pages) dealing with board knowledge.

It appears to be suggested by the claimants that they will, in light of the amendment to the claims, wish to rely on witness evidence relating to the issue of board knowledge. Paragraph 14 of Mr Daulby’s witness statement dated 16 February 2018 says:

“… it will be necessary for the claimant to explain what happened and why MGN’s senior management could and should have taken numerous steps.”

I accept, of course, that the claimants will need to provide evidence from which they say the appropriate inferences should be drawn about board knowledge. This is some distance, however, from the claimants providing evidence about what MGN senior management could and should have done. The latter is not primary evidence of fact.

During the course of the hearing I suggested to the parties that it is unlikely the court will wish to receive evidence from up to 50 witnesses and, in any event, it would be impractical to do so during a 15 day trial. It is disappointing that the court has been provided with core information that has the appearance of being unreliable. I will place reliance on the assumptions contained in the claimants’ budgets because they are supported by a statement of truth and are credible. However, the jump from 5 witnesses each to 10 each is not explained by the amendment and is not credible. Each of the claimants will need a full and careful witness statement to cover their personal circumstances and the effect upon them they say the articles have had. It is not for the claimants, however, to try make out in their evidence the causal links between the underlying evidence and the publication of each article. I am told the claimants will also wish to produce evidence from what Mr Browne QC described as their “associates” and journalists who have agreed to assist.

The claimants will need to consider the defendant’s witness statements. Here the number is less critical because the assumption is that the majority will be short. I proceed on the basis of a need to review 20 short statements and 10 statements of ordinary length. The same strictures about content (and therefore length) apply to the defendant. As I made clear at the hearing any party who includes irrelevant, argumentative or inadmissible material faces the risk of the offending passages being struck out.

Mr Leslie’s solicitors have already spent over 70 hours on witness statements by the date of the budget and estimate that a further 95 hours of partner time, 80 hours of associate time and 30 hours of time by a trainee will be spent. This estimate has to be considered alongside the assertion made by Taylor Hampton (Mr Leslie’s solicitors) in a letter to RPC dated 23 August 2017 that the preparation of the witness statements was “well advanced”. The budget makes provision for counsels’ input in drafting the statements and reviewing the defendant’s statements of £22,500 (56 hours) in the case of Mr Sherborne and £7,500 (37.5 hours) for Mr Santos.

The total budget for witness statements is £125,000 which includes £26,000 incurred costs.

Ms Houghton’s budget reveals only a very small amount of incurred time. The further work is estimated to require 70 hours of partner time, 65 hours of input from assistants and 40 hours by trainees/paralegals (175 hours in total). £20,000 is included for Mr Sherborne and £7,500 for Mr Santos. The grand total for the phase is £85,000.

It is understandable that Mr Leslie’s budget should be greater than Ms Houghton’s because his evidence will relate to a much larger number of articles. And I accept that task of producing a witness for the claimant in each case is a substantial task. However, the statements must be, as far as possible, the witness’ recollection, such as it is, of the relevant events uninfluenced by the exigencies of the case. It is concerning to see an assumption in both cases that there is to be a conference with counsel to review the statements.

As a matter of impression, the hours that are included in these budgets are grossly excessive and well above what is within a range of reasonable costs and a similar observation can be made about counsel’s fees. The amount of the time that has been budgeted suggests strongly that the statements will have only a passing connection with the direct recollection of the witnesses. They will have become an artificial construct of the lawyers.

I set the figures for the estimated costs of this phase at a total of £60,000 for Mr Leslie (having regard to the costs that have been incurred) and £50,000 for Ms Houghton.